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Wealth Management Cases

Wealth Management Case Analysis ---- three classic financial solutions for high-income, medium-income and low-income families

1. Low-income families: Safe investment

Zhang Xin, 28 years old, and her husband are ordinary workers in a same private enterprise with the family income of RMB2,500 per month. Over the years, they have been living frugally and saved RMB50,000. Since they are under great pressure for buying a house, education for their child, supporting their parents and other household expenditures, they want to seek absolutely stable investment with relatively high returns.

Financial planner’s recommendations: In view of low family income, traditional concept of financial management, poor risk tolerance, and absolutely sound family financial management requirements, it is recommended to adopt a financial portfolio, in which deposit accounts for 40%, national bonds 30%, banking financial products 20%, and insurance 10%. The deposit, a safe value-added method, takes the highest proportion of family assets; and the national bonds and banking financial products are also safe and have higher yields. The insurance only accounts for 10%, but it plays a big role in wealth protection. Many people have a misunderstanding that insurance is for the rich. In fact, this is a big mistake. If you have more money than you can spend, you won’t even care about the insurance claims if there is risk. While, low-income families have weak risk resistance capacity. In case of any accident, the insurance plays a big role in helping families go through difficult times.

2. Middle-income families: Profits on risks

Liu Xiaoyun, 34 years old, is engaged in HR in a public company, with a monthly income of RMB3,000. Her husband is a civil servant and her 8-year-old daughter is in the second grade class in a primary school. Their family has a monthly income of RMB6,000 with deposit of RMB100,000. Their goal is to save money and support their daughter to study in famous universities in Beijing, Shanghai or other metropolis for good education, so they hope maximize family wealth value with moderate risks.

Financial planner’s recommendations: Ms. Liu is of a middle-income family and both she and her husband have stable work with better benefits, so they are able to bear risks to a certain degree. They can adopt the portfolio of 40% for deposit, 20% bonds, 20% RMB wealth management and 20% funds or stock investments. The 40% deposit 20% bonds and 20% RMB wealth management are more secure financial products and 20% open-end funds or stocks are risky investment. If it has high returns on investment, the investment income of the whole portfolios will increase. Risks won’t have great impact on the family’s overall investment.

3. High-income families: No risks, no gains

Liu Min, 38 years old, is engaged in direct sales. Her husband is a vice president of a company and their monthly family income is RMB20,000. The couples have houses, cars, and deposit (RMB300,000). Their daughter is in junior high school. So the family has little burden at present.  Since the couple is engaged in business-related work and flexible in thinking with certain investment experience, their desire is to maximize the value of existing deposit.

Financial planner’s recommendations: Ms Liu is of a high-income family with strong anti-risk ability, so she can have an investment portfolio of 50% for open-end funds, and 50% for real estate. This portfolio has certain risk. However, the risk is always in direct proportion to return. If the risk investment goes well, the profits are considerable, just as the saying goes “no risks, no gains”. Although currently, open-end funds have declined in net value, long-term holders of Yifangda Steady, Jiashi Growth and other funds can still get substantial profits on average. Real estate investment is still attractive to high-income families. If the local housing prices are moderate, choose a good location for long-term investment and the annual yield can reach 10% and above.

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